Worst of Recession Has Yet to Hit Cities
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1-TENNESSEE TOWN & CITY/SEPTEMBER 21, 2009 www.TML1.org 6,250 subscribers www.TML1.org Volume 60, Number 15 September 21, 2009 Statewide building codes will make homes Cities to send out November Class 4 returns safer, more energy-efficient in Tennessee Implementation of business BY JIM PILLOW tax changes delayed until 2010 TDCI Assistant Commissioner Implementation of Public The Department will now begin Fire Prevention Division Chapter 530, which changes the ad- receiving business tax returns and ministration and collection of the payments for taxpayers beginning In an ideal world, a home- business tax from municipalities with the Classification 1 returns that owner would never deal with sub- and counties to the state, has been are due on or before Feb. 28, standard construction. Unfortu- postponed until February 2010. 2010. The Department will be pre- nately, stories of mold, framing Initially, the Tennessee Depart- pared on Jan. 1, 2010, to accept both problems, foundation problems, ment of Revenue planned to assume electronic and paper returns filed by excessive heating and cooling responsibility for administration Classification 1 businesses. costs, ventilation problems, un- and collection of business tax re- What does this mean to munici- safe egress and plumbing prob- turns beginning with the Classifica- palities? lems are all too common in our tion 4 returns due on or before Nov. 1. Classification 4 businesses will state. 30, 2009. However, the Department file returns that are due on or before One of the best remedies for has been unable to complete the Nov. 30, 2009, with municipal substandard construction is the development of the database and clerks /recorders /collection offi- adoption of building codes. That technical tools required for imple- cials. Businesses are to use existing goal is at the heart of legislation mentation within the desired time tax returns provided by the munici- recently signed into law by Gov. frame. As such, the Department has pality. Municipalities are to pro- Phil Bredesen. The Tennessee been forced to postpone the transi- cess the returns in the same manner Department of Commerce and In- tion. See BUSINESS on Page 6 surance (TDCI) oversees building The adoption of building codes is at the heart of recent legislation codes and will play a central role signed into law by Gov. Phil Bredesen. in implementing the Governor’s Worst of recession vision of safer and more-energy- lishing a minimum one- and two- We are committed to estab- efficient homes in Tennessee. family residential code to protect all lishing a limited statewide resi- More than a year ago, TDCI the citizens of Tennessee. The dential building code, not just to has yet to hit cities Commissioner Leslie A. Newman Governor’s Task Force on Energy save Tennessee’s consumers on and her staff began meeting with Efficiency, recognizing that Ten- energy costs, but to make our NLC survey says cities’ financial conditions to worsen representatives of cities, counties, nessee ranks number one in per- homes safer. We believe the new Cities are in the early stages of meeting fiscal needs, while 89 per- insurers, environmentalists, fire capita consumption of residential energy law is a huge step in the registering the effects of the cent expect the same in 2010. This is officials, homebuilders, contrac- energy, recommended a statewide right direction and are very thank nation’s economic downturn, ac- the worst outlook the report has de- tors and others to discuss the residential one- and two-family con- ful to Governor Bredesen for his cording to the National League of tailed in 24 years. Department’s interest in estab- struction code. See CODES on Page 5 Cities (NLC) annual report on fiscal Under state law, most cities are conditions. The report finds that the required to balance their budgets, ability of cities to meet their finan- which means their expenses cannot TDEC fee increases adopted permanently cial needs will only worsen through exceed revenues in a given budget 2010 and beyond. year. According to the report, to the legislature enacted a provision granted TDEC the authority to in- The report, City Fiscal Condi- meet projected budget shortfalls, BY DENISE PAIGE which bypassed the prohibition in- crease fee revenue starting July 1, tions in 2009, reveals that cities face cities are taking a number of steps to TML Government Relations tended to prevent the General As- 2009. Accordingly, on July 1, TDEC significant budget gaps (-2.9 per- cut back expenses or raise revenue. sembly from enacting fees to offset implemented the fee increases under cent) this year, due to the decline of Cities are instituting hiring freezes Following lengthy delibera- state appropriations until July 30, its public necessity rulemaking au- income (-1.3 percent) and sales tax or layoffs (67 percent), canceling tions, both the Water Quality Con- 2012. In other words, the General thority; setting in motion a 165-day (-3.8 percent) collections. These capital infrastructure projects (62 trol Board (WQCB) and the Water Assembly waived this provision so review of the new rules. During this taxes are typically the earliest percent) and cutting services other and Wastewater Operators Certifi- that the costs associated with reduc- required review period, TDEC initi- source of city revenue to decline as than public safety (32 percent). cation Board (WWOCB) perma- tions in state appropriations can be ated the rule-making process and job losses in a community increase Many are decreasing spending on nently adopted fee increases to per- passed on to local governments and held public meetings concerning the and consumer purchases decrease. non-personnel operating expenses. mit annual maintenance fees in the other customers. fee increases across the state. Property taxes, which make up the To raise revenue, according to Environmental Protection Fund and First, the state reduced appro- The DWPC elected to increase bulk of city revenue nationwide, are the report, cities are increasing the cross connection training and certi- priations to the Division of Water permit annual maintenance fees by beginning to slow (1.6 percent fees charged for city services or fication fees for the Fleming Train- Pollution Control (DWPC) by $1.4 approximately 38.4 percent to com- growth) as real property assess- increasing taxes. Four in 10 (42 per- ing Center (FTC), a facility located million. The DWPC is the section of bat the state reduction. During the ments are adjusted to reflect declin- cent) of cities are increasing the in Murfreesboro that offers training, the Tennessee Department of Envi- public comment period, a number of ing housing values. level of fees they charge and 25 certification, and technical assis- ronment and Conservation (TDEC) groups voiced objection to the pro- Because most city tax revenue percent are creating new fees for tance to water and wastewater sys- responsible for the administration of posal, including TML, the Chamber is collected only at a few specific some services. The report indicates tems across the state. the Tennessee Water Quality Con- of Commerce, and the Tennessee points during the year, or over the that 25 percent of cities have in- In the final days of the 2009 trol Act of 1977, which, as one of its Storm Water Association. The course of several years in the case of creased property taxes. legislative session, the General As- duties to monitor and analyze water WQCB, in turn, agreed examine the property tax revenue, there is usu- “The current economic situa- sembly reduced the amount of state quality in the state, issues permits to fee schedule for the next few years ally a time lag of 18 months to tion is wreaking havoc on city bud- dollars allocated to several divi- municipalities. Secondly, the legis- and to re-evaluate it prior to June several years before economic gets,” said NLC President Kathleen sions of the Tennessee Department lature eliminated all state funding to 30, 2012, to determine if the fee shifts have an impact on city fiscal Novak, mayor, Northglenn, Colo. of Environment and Conservation the Fleming Training Center. schedule needs to be continued, conditions. “Although we are beginning to see (TDEC) as part of the plan to bal- In an effort to offset the effects modified, or discontinued. The Report co-author, Michael A. signs of a possible recovery in the ance the state budget. Additionally, of these cuts, the state legislature See TDEC on Page 6 Pagano, professor at the University national economy, city officials will of Illinois at Chicago, cautions: need to be more proactive than ever “Cities face the burden of confront- in terms of monitoring their bud- Broadband Task Force pursues the ing the effects of the downturn for gets, reevaluating budget priorities, years after any recession ends. This and identifying new revenue and means that cities will be navigating savings opportunities.” need for speed across Tennessee the implications of the downturn for Most of the available economic awhile longer, even if the business data points to a slow recovery be- BY VICTORIA SOUTH climate turns around immediately.” ginning sometime in 2010. Housing TML Communications Coordinator In the face of declining revenue is expected to recover slowly with and increasing expenses, city fi- consumer spending remaining at Nearly 2,200 diverse strategies nance officers are pessimistic about low levels. Since these are the for a technically charged America cities’ abilities to meet their finan- maindrivers of property tax and have been signed, sealed and deliv- cial needs. Nine in ten (88 percent) sales tax revenue streams, cities will ered, as state and local govern- say this year will be difficult in See RECESSION on Page 5 ments, businesses, nonprofit groups and other entities across the nation applied for the first round of eco- Knoxville going to the dogs? nomic stimulus funded loans and grants supporting projects to ex- Area aims to be most pet friendly pand broadband access.